Understanding Credit Scores

What is a Credit Score?

A credit score is a three-digit number that represents your creditworthiness. In the UAE, credit scores are managed by Al Etihad Credit Bureau (AECB), the country's official credit reporting agency established in 2014.

Your AECB credit score ranges from 300 to 900, with higher scores indicating better creditworthiness. This score is calculated based on your credit history, payment behavior, and overall financial responsibility.

Banks and financial institutions use this score to decide:

Whether to approve your loan or credit card application
What interest rate to offer you
Your credit limit
Terms and conditions of financial products

Score Ranges

AECB Credit Score Ranges

Understanding where your score falls

300 (Poor) 500 (Fair) 650 (Good) 750 (Very Good) 900 (Excellent)

300-549: Poor

Significant credit issues. Most applications will be declined. Focus on improving payment history and reducing debt before applying for new credit.

550-649: Fair

Below average credit. May qualify for some products but with higher interest rates. Work on building positive credit history.

650-749: Good

Average to good credit. Eligible for most financial products with competitive rates. Keep maintaining good habits.

750-849: Very Good

Strong credit profile. Access to premium products and favorable terms. You're in great shape financially.

850-900: Excellent

Exceptional credit. Best rates, highest limits, and exclusive offers. Maintain your excellent financial habits.

Key Factors

What Affects Your Credit Score?

Understanding these factors helps you take control of your score

Payment History (35%)

Most Important Factor

Your track record of paying bills on time. Late payments, defaults, and collections severely damage your score. Even one 30-day late payment can drop your score significantly.

Credit Utilization (30%)

How Much You Use

The percentage of available credit you're using. Keep utilization below 30% of your total credit limit. For example, if you have AED 50,000 limit, try to keep balances under AED 15,000.

Credit History Length (15%)

Time Matters

How long you've had credit accounts. Longer history generally means better score. Avoid closing old accounts in good standing - they help your average account age.

Credit Mix (10%)

Types of Credit

Having different types of credit (credit cards, auto loans, personal loans) shows you can manage various financial products responsibly.

New Credit (10%)

Recent Applications

Frequency of credit applications. Each application creates a "hard inquiry" that can temporarily lower your score. Multiple applications in a short time is a red flag.

How to Check Your Credit Score

In the UAE, you can obtain your credit report and score from AECB (Al Etihad Credit Bureau). Here's how:

AECB Website: Visit aecb.gov.ae and register for an account. You'll need your Emirates ID.
AECB App: Download the official AECB app from App Store or Google Play.
Bank Partnerships: Some banks offer free credit score checks through their mobile apps.

Cost:

Credit Report with Score: Starting from AED 84 (one-time)
Credit Score only: Starting from AED 31.5
Annual subscription options available for regular monitoring

Tip: Check your report at least once a year to catch errors and monitor for identity theft.

Action Plan

How to Build an Excellent Credit Score

Follow these strategies to achieve 750+ credit score

Pay On Time, Every Time

Set up automatic payments or reminders. Even if you can only pay the minimum, never miss a due date. Payment history is the biggest factor.

Keep Utilization Low

Try to use less than 30% of your credit limit. If your limit is AED 20,000, keep balances under AED 6,000. Lower is even better.

Don't Close Old Accounts

Keep your oldest credit card open, even if you rarely use it. The length of credit history matters. Use it occasionally to keep it active.

Limit New Applications

Only apply for credit you need. Multiple applications in a short period hurt your score. Space out applications by at least 6 months.

Diversify Credit Types

Having different types of credit (cards, loans) can help. But don't take unnecessary debt just to diversify - only borrow what you need.

Monitor Your Report

Check your AECB report regularly. Dispute any errors immediately. Watch for signs of identity theft or fraud.

Building Credit as a New UAE Resident

If you're new to the UAE, you start with no local credit history. Here's how to build credit from scratch:

Get a Salary Transfer Account: Banks are more likely to offer credit to customers who receive their salary through the bank
Start with a Secured Credit Card: Some banks offer cards backed by a fixed deposit - perfect for building initial credit
Apply for a Basic Credit Card: After 3-6 months of salary transfers, apply for an entry-level credit card
Use Credit Responsibly: Make small purchases and pay the full balance each month
Consider a Small Personal Loan: If needed, a small loan repaid on time builds credit history

Timeline: Expect to build a solid credit score within 12-18 months of responsible credit use.

Avoid These

Credit Score Mistakes to Avoid

Don't let these common errors damage your credit

Maxing Out Credit Cards

Using 100% of your credit limit severely hurts your score, even if you pay it off. Try to stay below 30% utilization at all times.

Paying Only Minimums

While this protects your payment history, carrying balances means high interest charges and can indicate financial stress to lenders.

Applying for Multiple Cards

Each application creates a hard inquiry. Multiple inquiries in a short time suggest desperation and lower your score.

Ignoring Your Report

Errors happen. Fraudulent accounts can appear. Check your AECB report regularly and dispute any inaccuracies immediately.

Closing Credit Accounts

Closing old accounts shortens your credit history and increases utilization ratio. Keep old accounts open, even if unused.

Co-signing Carelessly

Co-signing makes you responsible for someone else's debt. If they default, it damages your credit too. Think carefully before co-signing.

Benefits of an Excellent Credit Score

A high credit score unlocks significant financial advantages in the UAE:

Lower Interest Rates: Save thousands of dirhams on loans and mortgages with reduced rates
Higher Credit Limits: Access more credit when you need it for emergencies or opportunities
Premium Credit Cards: Qualify for cards with better rewards, airport lounge access, and exclusive perks
Easier Approvals: Get faster approvals for apartments, car leases, and financial products
Better Insurance Rates: Some insurers consider credit scores when setting premiums
Negotiating Power: Banks may offer better terms to customers with excellent credit